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United States Government Accountability Office:
GAO:
Report to Congressional Committees:
September 2012:
VA Disability Compensation:
Actions Needed to Address Hurdles Facing Program Modernization:
GAO-12-846:
GAO Highlights:
Highlights of GAO-12-846, a report to congressional committees.
Why GAO Did This Study:
VA administers one of the nation’s largest federal disability
compensation programs, providing veterans with a cash benefit based on
average loss of earning capacity as a result of service-connected
disabilities. However, concerns exist that VA’s rating schedule—the
criteria used to assign degree of work disability—is not consistent
with changes in medicine and the labor market. Due in part to these
types of challenges, GAO designated federal disability programs as
high risk. Consequently, GAO examined (1) VA’s progress in revising
its rating schedule with updated medical and economic information; and
(2) the opportunities and challenges of various policy approaches
proposed by commissions and others for updating VA’s disability
benefits structure. To do this, GAO reviewed literature and VA
documents, and relevant federal laws and regulations, as well as
interviewed VA officials, disability experts, and veteran groups.
What GAO Found:
The Department of Veterans Affairs (VA) initiated a comprehensive
effort in 2009 to revise its disability rating schedule with both
updated medical and earnings information, but faces hurdles with
several key aspects. The current revision effort takes a more
comprehensive and empirical approach than VA’s past efforts. VA has
hired full-time staff to revise the rating schedule’s medical
information and plans to conduct studies to evaluate veterans’ average
loss of earnings in today’s economy. As part of this effort, VA is
considering modifying the rating schedule—-currently based largely on
degree of medical severity—to include a veteran’s ability to function
in the workplace. Moving in this direction is more consistent with how
experts conceive of disability. However, this change, in part, has
resulted in VA falling behind schedule. As of July 2012, VA is over 12
months behind in revising criteria for the first categories of
impairments. In addition, VA has not developed its capacity to produce
timely research on the impact of impairments on earnings. Moreover, VA
lacks a complete plan—with specific activities and updated time frames—
for conducting earnings loss and related studies. VA also does not
have a written strategy to address the possible effects that revisions
may have on agency operations, including impacts on an already
strained claims workload. Finally, although VA intends to conduct
medical and earnings updates beyond the current effort, VA lacks a
formal mechanism to guide its commitment to do so. It is important
that VA update and maintain its rating schedule to reflect current
medical and labor market information to avoid overcompensating some
veterans with service-connected disabilities while undercompensating
others.
Three key approaches for modernizing VA’s disability programs
recommended by disability commissions and others—-providing quality of
life payments, providing integrated vocational services with
transitional cash assistance, and systematically factoring the effects
of assistive technology and medical interventions into rating
decisions—-hold opportunity and challenges. Experts and veteran groups
GAO interviewed believe each approach holds at least some opportunity
for serving veterans more fairly, equitably, and effectively. However,
challenges exist. For example, they noted that it could be difficult
to achieve consensus for specific design elements among the diverse
set of stakeholders. Also, VA’s capacity to administer these
approaches-—which could increase the complexity and/or number of
claims—-is questionable. Importantly, costs of each approach were
raised. Some interviewees also noted that two or more of the
approaches could be combined into a comprehensive benefits package
that may mitigate concerns raised by the implementation of any single
approach. For example, if factoring assistive technology into
disability ratings resulted in lower disability compensation payment
levels for some, a quality of life payment could offset that loss. VA
officials told GAO they are not considering these approaches because
they fall outside of VA’s legal responsibility to compensate for loss
of earning capacity. However, a system that maximizes equity, balances
fiscal pressures, and ultimately serves individual veterans
effectively will benefit from deliberations informed by more modern
views about disability.
What GAO Recommends:
Congress may wish to direct VA to conduct focused studies on various
approaches to modernize disability benefits and, if necessary, propose
relevant legislation. GAO is also making several recommendations to
improve VA’s capacity to revise the rating schedule now and in the
future. These include completing plans for conducting earnings loss
studies and developing a written strategy for implementing revisions
to the rating schedule. VA agreed with the recommendations and noted
plans to address them.
View [hyperlink, http://www.gao.gov/products/GAO-12-846]. For more
information, contact Daniel Bertoni at (202) 512-7215 or
bertonid@gao.gov.
[End of section]
Contents:
Letter:
Background:
VA Has Begun to Update Its Disability Criteria, but Faces Delays and
Lacks Complete Planning in Key Areas:
Selected Policy Approaches for Updating VA's Benefit Structure Present
Both Opportunities and Challenges:
Conclusions:
Matter for Congressional Consideration:
Recommendations for Executive Action:
Appendix I: Scope and Methodology:
Appendix II: Comprehensive Revisions and Other Key Updates to the VA
Schedule for Rating Disabilities (VASRD):
Appendix III: Key Questions for Designing New Disability Compensation
Programs:
Appendix IV: Comments from the Department of Veterans Affairs:
Appendix V: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Examples of Medical Changes to VA's Rating Schedule Being
Considered during the Current Update:
Table 2: Key Steps Missing from VA's Project Planning:
Table 3: Six Elements of Sound Planning Used to Evaluate VA's Efforts:
Table 4: Experts and Veteran Groups Interviewed by GAO:
Figures:
Figure 1: The VA Disability Benefits Process:
Figure 2: VA's Process for Revising the Disability Compensation Rating
Schedule:
Figure 3: Overview of What VA Does Now and the Modified Approaches:
Figure 4: Experts' and Veteran Groups' Views on Potential
Opportunities and Challenges of Providing a Quality of Life Payment:
Figure 5: Experts' and Veteran Groups' Views on Potential
Opportunities and Challenges of Providing Integrated Vocational
Services along with Transitional Cash Assistance:
Figure 6: Experts' and Veteran Groups' Views on Potential
Opportunities and Challenges of Incorporating Assistive Technology and
Medical Interventions into Disability Rating Decisions:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
September 10, 2012:
Congressional Committees:
The nation is committed to caring for veterans who incurred injuries
during their military service. To compensate for these sacrifices, the
U.S. Department of Veterans Affairs (VA) administers one of the
largest federal disability compensation programs in the nation. VA's
disability compensation program provides veterans with a cash benefit
based on the average loss in earning capacity in civilian occupations
that result from injuries or conditions incurred or aggravated during
military service. In fiscal year 2011, VA's program provided about
$39.4 billion in disability payments to nearly 3.4 million veterans
with service-connected disabilities. In the years ahead, enrollment
and costs could increase given the conflicts in Iraq and Afghanistan
and as more Vietnam veterans--a significant proportion of the total
veteran population--further age into disability-prone years. Given the
large cash outlays and increasing demand for VA services, VA must be
well positioned to make accurate disability decisions and ensure that
veterans are appropriately and equitably compensated.
In 2003, GAO designated federal disability programs, including VA's
disability program, as high risk due in part to challenges agencies
face in keeping their criteria for evaluating disability and
determining compensation consistent with advances in medicine,
technology, and changes in the labor market and society. According to
experts, VA's disability program infers the ability to work based on
an individual's medical conditions and symptoms--a concept that
originated with the creation of the schedule for rating disabilities
over 65 years ago. However, experts believe that, in assessing
disability, a modern practice includes considering an individual's
ability to function in their work and other environments along with
their medical conditions.
These concerns, in light of more modern concepts of disability,
present an opportunity to reevaluate this federal program. Various
reports and studies conducted by GAO, congressional-and presidential-
appointed commissions (including the Veterans' Disability Benefits
Commission and the Dole-Shalala Commission), and task forces have
individually suggested various approaches to address a sensitive, but
critical, national issue: how to update and strengthen VA's disability
benefits structure, including the type, timing, and conditions of cash
and other assistance to ensure that veterans with service-connected
disabilities receive the compensation and services they deserve.
We have prepared this report under the Comptroller General's authority
to evaluate government programs as part of our continued effort to
assist policymakers in determining how VA programs could more
effectively meet the needs of veterans with disabilities in the 21st
Century.[Footnote 1] In this report, we (1) identify the progress that
VA has made in revising the criteria used to determine eligibility for
veterans' disability benefits with updated medical and economic
information, and (2) discuss the opportunities and challenges
associated with various policy approaches that disability commissions
and others have raised for updating VA's disability benefits structure.
To conduct our work, we reviewed prior GAO, disability commission and
committee reports; relevant federal laws and regulations; program
documentation, including policies, procedures, strategic goals, and
supporting project plans; and testimonies from disability groups and
commissions. We interviewed VA officials, disability experts, and
representatives of veteran groups. We also evaluated VA's project
plans for revising its disability criteria against generally accepted
project management practices. To identify the policy approaches for
our second objective, we conducted a literature search of relevant
reports by disability commissions, task forces, committees, as well as
GAO reports. We selected policy approaches that address VA's
disability benefits structure and which reflect more modern concepts
of disability. To identify the opportunities and challenges associated
with these policy approaches, we conducted 16 interviews with a range
of informed experts and veteran groups on the political and
administrative feasibility, effectiveness, and fiscal sustainability
they believe are associated with each approach. Of those we
interviewed, most said that the policy approaches we selected were
relevant approaches for our research purposes. Our nongeneralizable
sample of experts included individuals who participated in disability
commissions, research, or congressional testimony on the topic, or who
serve in an organization that represents veterans with disabilities.
Additional information about our scope and methodology is provided in
appendix I.
We conducted this performance audit from August 2011 to September 2012
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.
Background:
VA's Disability Compensation Program and Related Services:
VA's disability program compensates veterans with a service-connected
disability by providing a monthly cash benefit. As required by
statute, the benefit is based upon an average reduction in earning
capacity across a group of individuals with a similar physical or
mental impairment.[Footnote 2] Thus, the benefit is not based on the
loss of individual earnings or noneconomic losses. A veteran with a
service-connected disability receives the benefit whether or not
employed and regardless of the amount of income he or she is earning.
The level of cash benefit is determined in part through the Veterans
Affairs Schedule for Rating Disabilities (VASRD or rating schedule).
The rating schedule is based on the extent to which the veteran's
disability limits average earning capacity. VA staff use the rating
schedule to assign disability ratings to veterans.[Footnote 3] The
rating schedule contains medical conditions or injuries categorized
into 15 body systems, with a level of severity ranging in 10 percent
increments up to 100 percent. For example, the removal of three ribs
is rated as a 30 percent impairment in earning capacity, or $389 per
month, and cash benefits are increased for veterans with spouses and
dependents.[Footnote 4] A veteran must be rated at least 10 percent to
receive cash benefits. For veterans with multiple impairments, VA uses
a table that applies a formula for combining ratings into a single
rating.[Footnote 5]
Besides cash assistance, VA provides health care, housing, vocational
rehabilitation, and other employment-related services to eligible
veterans.[Footnote 6] These services are provided through multiple
administrations and programs within VA, such as the Veterans Health
Administration and Vocational Rehabilitation and Employment program.
In many instances, a veteran must first receive a disability rating
from the Veterans Benefits Administration (VBA) and then apply for
these services at the discretion of the veteran, as shown in figure 1.
Figure 1: The VA Disability Benefits Process:
[Refer to PDF for image: illustration]
Veteran:
Former active-duty service member who was not dishonorably discharged,
To be eligible for VA benefits, a veteran must have a medically
diagnosed disability and evidence linking that disability to the
veteran's experience on active duty.
1. Disability rating:
VA assigns veteran Veterans Affairs Rating Disabilities rating of 0%
to 100%.
A rating of at least 10% is generally required for VA cash benefits.
2. Cash benefits:
VA gives eligible beneficiaries a cash benefit to compensate for
average loss of earning capacity.
Completing additional documentation is often required for VA to
determine additional eligibility for benefits such as:
* Vocational training;
* Specially adapted housing;
* Other medical/rehabilitation services.
3. Additional services:
Veterans may also apply for VA services outside of the compensation
program.
Source: GAO analysis of VA and Congressional Research Service
documents.
Note: This figure is intended to present a basic overview of VA's
disability compensation program. For clarity purposes, we omitted some
steps, processes, and legal options.
[End of figure]
Concerns about VA's Disability Program in Light of Modern Approaches:
Various commissions, expert panels, and our prior work have raised a
variety of concerns about the soundness of the rating schedule and
about VA's basic disability benefits structure. The following were
among these concerns:
* VA's modifications of the medical information in the disability
criteria have been slow and have not fully incorporated advances in
technology and medicine. Moreover, the rating schedule has not been
adjusted since its creation in 1945 to reflect ongoing changes in the
labor market. Past studies evaluated veterans' with service-connected
disabilities average loss of earnings and found that not all veterans
were being equitably compensated.[Footnote 7]
* VA faces continuing challenges in the area of disability claims
processing, contributing to a large backlog of initial compensation
claims and appeals.[Footnote 8]
* VA focuses too singularly on compensation without adequate focus on
rehabilitation to maximize a veteran's recovery and reintegration.
This issue was raised by the Bradley Commission and Dole-Shalala
Commission.[Footnote 9] Also, a small proportion of veterans
participate in VA's vocational services.[Footnote 10]
* VA's various disability benefits and services need to be better
integrated to serve individual veterans.
To address these and other concerns, GAO, commissions, committees, and
expert panels made a range of recommendations that generally reflect
modern concepts of disability. These modern concepts are reflected in
the International Classification of Functioning, Disability, and
Health (ICF), which is the World Health Organization's framework for
health and disability.[Footnote 11] This framework takes into account
the interaction between an individual's medical condition or
impairment and intervening factors, such as their physical and social
environment.[Footnote 12] That is, rather than predominately viewing
disability as a medical condition (e.g., loss of an arm), modern
concepts of disability focus on an individual's functional ability.
Under these concepts, two people with the same impairment and
symptoms, for a variety of reasons, might have different degrees of
disability. For example, some individuals with post-traumatic stress
disorder (PTSD) may experience symptoms such as anxiety, depression,
and insomnia that make maintaining employment very difficult. However,
other individuals with PTSD may be able to mitigate these symptoms
through medication or other therapies and perform adequately in a work
environment. Some frameworks of disability also distinguish work
participation from other consequences of injuries or diseases that
have a broader impact on a person's quality of life. Examples include
difficulty interacting with family and friends and managing personal
finances.
VA Has Begun to Update Its Disability Criteria, but Faces Delays and
Lacks Complete Planning in Key Areas:
VA Has Begun a Comprehensive Update of Its Disability Criteria with
Medical and Earnings Information:
In response to a directive from the Secretary, VA initiated an effort
in 2009 to comprehensively revise all 15 body systems in its
disability rating schedule.[Footnote 13] This comprehensive revision
will update the two major components of the rating schedule: (1) the
medical criteria, and (2) earnings loss information. In 1989, VA took
steps to conduct a comprehensive revision of the medical criteria, but
it did not complete revisions for all body systems.[Footnote 14] Since
then, VA has updated portions of its medical criteria primarily in
response to congressional or stakeholder requests. (See appendix II
for more information about previous updates to the rating schedule.)
According to VA, while the agency has conducted economic earnings loss
studies, it has never adjusted the rating schedule based on the
findings from these studies.[Footnote 15] According to VA, the purpose
of the current initiative to update the medical and earnings loss
information is to ensure the rating schedule is as accurate and
modernized as possible to meet the needs of veterans in the 21st
century.[Footnote 16]
VA is using a multiphase process to comprehensively revise the medical
and earnings information for each body system. This process is led by
VBA--which hired six full-time medical officers to lead the revisions--
in consultation with the Veterans Health Administration. Phase 1
involves a 2-day public forum to solicit updated medical information
from various stakeholders, and the process ends with the publication
of revisions as final rules in the Federal Register, as shown in
figure 2.
Figure 2: VA's Process for Revising the Disability Compensation Rating
Schedule:
[Refer to PDF for image: illustration]
Medical updates:
Phase 1: Hold public forums:
* Hold public forum for each body system;
* Solicit updated medical information from governmental and private-
sector subject matter experts, and get input from the public and
interested stakeholders.
Phase 2: Convene workgroups and draft revisions:
* Representatives from VBA, VHA, Rating Specialists, and legal and
medical experts help draft proposed body system revisions.
Earnings loss updates:
Analyze results from previous studies:
* For 3 of 15 body systems;
and:
Conduct new studies:
* For 12 of 15 body systems;
* Contract with outside organizations to conduct econometric studies.
Incorporate earnings loss information into proposed revisions.
Phase 3: Conduct internal review and impact analysis:
* Conduct an impact analysis for the draft proposed rule;
* Internal review of proposed rule by several departments within VA;
* Hold status summit before publication of proposed rules to solicit
public comments.
Phase 4: Publish draft rules and hold comment period:
* Publish draft rule in the Federal Register for public comment;
* Respond to comments in a published final rule.
Phase 5: Publish final rules:
* Final rule for body system published in Federal Register.
Source: GAO analysis of VA documentation and interviews with VA
officials.
[End of figure]
To conduct the medical updates, the workgroups evaluate all
impairments in the current rating schedule and make recommendations to
add or remove impairments, update medical and diagnostic terminology,
and clarify impairments that cannot be easily identified. For example,
as part of the current updates, VA workgroups proposed adding a new
body system, "rheumatic diseases." See table 1 for examples of changes
being considered to existing body systems. In addition to specific
updates and clarifications, the medical workgroups consider broader
concepts such as how VA measures pain for the purposes of evaluating
claims.
Table 1: Examples of Medical Changes to VA's Rating Schedule Being
Considered during the Current Update:
Body system: Digestive/nutritional disorders;
Medical change being considered: Add new criteria for liver
transplants;
Update criteria for malnutrition and Celiac disease.
Body system: Dental and oral conditions;
Medical change being considered: Revise criteria for hard and soft
tissue impairments.
Body system: Skin;
Medical change being considered: Use color photographs in the
evaluations of dermatological disorders.
Source: GAO analysis of VA presentations on rating schedule updates.
[End of table]
In recognition of medical advances and current research on disability,
VA is considering revising its criteria to reflect a more modern view
of disability that gives greater consideration to a veteran's ability
to function with a service-connected disability.[Footnote 17]
According to VA officials, a common theme emerging from the workgroups
is the need to shift from the current symptom-based rating criteria to
one that incorporates a veteran's ability to function in the
workplace. Subject-matter experts involved in the workgroups have
suggested that, while symptoms determine diagnosis, the best indicator
of impairment in earnings is the translation of symptoms into
functional impairment.[Footnote 18] To develop the indicators of
functional impairment, VA conducted research and determined that four
functional domains directly impact one's ability to secure and
maintain gainful employment. These include interacting with others,
developing and maintaining a routine or schedule, managing workload
demands, and completing tasks that require mental skills.[Footnote 19]
While VA is considering a number of different elements to update its
medical criteria, it is giving only limited consideration to the role
that supports--such as assistive technology and medical interventions--
can play in enhancing a veteran's earning capacity. In 2002, we
reported that VA's program was not designed to factor in the potential
benefits of treatment, corrective devices, and assistive technology
when evaluating a veteran's service-connected disability.[Footnote 20]
Assistive devices and other supports can play a critical role in a
veteran's capacity for work, according to the ICF framework. VA
officials told us that, while they plan to consider how medical
advances have decreased the severity and duration of some conditions,
they do not plan to change the way assistive technology and medical
interventions are considered when making individual disability
determinations for a number of reasons.[Footnote 21] Specifically,
according to VA officials, including the effects of assistive
technology in evaluations of disabilities would overlook the severity
of the disability itself and focus on the individualized adaptation to
an assistive device, and the statute for VA's disability compensation
program is based on the average reduction in earning capacity across a
group of individuals with a similar physical or mental impairment.
[Footnote 22]
Concurrent with the medical updates, VA also plans to obtain updated
information on the average earnings loss associated with service-
connected disabilities. VA officials stated that conducting earnings
loss analyses are necessary to make knowledge-based adjustments to the
rating schedule, a practice consistent with recommendations from
expert panels and our prior work.[Footnote 23] An important aspect of
the earnings updates are validation studies to confirm the findings of
the earnings loss analyses and to verify the accuracy of proposed
changes to the rating schedule. The validation studies will be
conducted through separate contracts. Specifically, VA plans to update
all 15 body systems as follows:
* For the first three body systems--the mental health,
hemic/lymphatic, and endocrine systems--VA plans to use the results
from a 2008 earnings loss report to inform any adjustments to the
level of compensation associated with these various impairments.
[Footnote 24]
* For the remaining 12 body systems, VA plans to contract with
external organizations to conduct earnings loss studies and validation
studies. However, VA's first contracted earnings study with a
university for the musculoskeletal system is pending termination as of
August 2012, according to VA.
For each earnings loss study, the contractor will identify the average
lifetime earnings loss incurred by veterans with specific service-
connected disabilities. To do this, the studies will compare the
earnings levels of veterans with various service-connected
disabilities to veterans without a disability as well as with the
nonveteran population. Contractors will identify differences between
veterans' average earnings losses and VA disability compensation
levels (i.e., the extent that veterans are being over-and
undercompensated) and suggest improvements to the current system.
VA's Revision Process Faces Delays and Additional Hurdles:
VA has experienced delays in revising its disability rating schedule.
Specifically, VA planned to publish final rules in the Federal
Register (phase 5) for the first three body systems by June 2011. VA
has not, however, met this goal. As of July 2012, VA has completed
public forums for all 15 body systems (phase 1) and has working drafts
of revisions for nine body systems (phase 3). However, VA has not
issued any proposed or final rules (phases 4 and 5). Moreover, as of
July 2012, VA was more than a year behind in completing the first
earnings loss study for the musculoskeletal body system and has yet to
complete studies for the remaining eleven body systems. According to
VA officials, they now expect to issue proposed rules for all body
systems by 2016, but they have moved the original project completion
date from 2016 to an unspecified future date.
VA officials noted various reasons for the delays, including a lengthy
drafting and review process for the potential medical revisions. VA
officials told us that giving greater consideration to functional
impairment represents a significant change to VA's current disability
criteria. As a result, VA workgroups and staff have taken longer to
draft and review revisions than originally planned. Furthermore, VA
took additional steps to solicit comments from stakeholders about
these changes. For example, VA held a rating schedule status summit in
June 2012 to publicly share the draft revisions for nine body systems
before the publication of proposed rules in the Federal Register in an
effort to promote transparency and solicit comments.
VA also is experiencing delays because it has had difficulty obtaining
the data it needs to study earnings loss. Specifically, to conduct
these studies, VA needs earnings data from the Social Security
Administration (SSA) and the Internal Revenue Service (IRS), among
other data sources, as well as VA data on veterans with service-
connected disabilities. VA officials stated that the coordination
between the various federal agencies took much longer than expected,
in part, because federal law generally prohibits the release of
certain individual information.[Footnote 25] VA officials also stated
that VBA contractors must work very closely with SSA to process,
analyze, and transmit earnings data. As of July 2012, VA had not
obtained the aggregate data from SSA or the IRS needed to conduct the
first earnings loss study. In addition, VA officials described hurdles
obtaining internal agency data in a timely way. For example, VBA has
experienced challenges coordinating with another VA office to obtain
data needed to evaluate veterans' earnings losses. VBA recently
received this data 12 months after first requesting it. To address
this hurdle and streamline the process, VBA is implementing a system
that will allow VBA staff to more independently access and analyze
internal data. However, as of July 2012, VBA had not fully implemented
this new system.
In addition to delays in obtaining data, VA faces other hurdles
related to the earnings loss studies. For example, VA currently relies
on external organizations that produce studies one body system at a
time. Experts we interviewed, including members of VA's Advisory
Committee on Disability Compensation, said this process is inefficient
and may not best facilitate the agency's goal to measure earnings loss
on an ongoing basis. As one expert noted, to contract with an external
organization, VA must complete market research and evaluate and select
a contractor, among other tasks. Once a contractor is selected, they
must then perform a number of start-up tasks, including applying for
security clearances and authorization to use VA data, reviewing the
methodology of previous earnings studies, and identifying and
gathering needed data from various federal agencies to create a study
group of veterans with service-connected disabilities and a comparison
group. To avoid repeating these tasks for each contract, several
experts we interviewed suggested that VA should build its internal
research capacity to more seamlessly conduct these studies. For
example, VA could develop more in-house resources for conducting these
types of analyses or establish long-term partnerships with research
organizations. VA has explored methods to build their research
capacity, but it has yet to adopt an approach for doing so.
According to some experts we interviewed, even after the earnings loss
studies are completed, VA's revision initiative may face an additional
hurdle: gaining acceptance from a diverse group of stakeholders.
Various experts and veteran groups have raised concerns about the
changes being considered.[Footnote 26] Some experts and veteran groups
we interviewed raised concerns about incorporating measures of
functional impairment into the rating schedule. They stated that
assessing a veteran's function may result in a more prolonged
disability claims process and questioned VA's ability to successfully
implement new functional criteria. In addition, one veteran group
raised concerns that the earnings loss studies may not adequately
capture the complex nature of a veteran's impaired earning capacity.
For example, measuring veterans' average lifetime earnings losses due
to a service-connected injury or illness--the aim of the current
studies--may not capture lost opportunities to pursue a more lucrative
or fulfilling career. At the same time, several experts did not agree
with the methodology of the current earnings loss studies.[Footnote
27] Other experts said that these studies are a good way to measure
average earnings loss. In addition, several veteran group
representatives told us that the rating schedule in its present form
generally represents an equitable method for determining disability
compensation.
VA's Project Planning Reflects a Number of Sound Practices but Lacks
Key Information:
To guide the revision initiative, VA developed a project management
plan and operating plan that contain many elements of sound planning
but lack complete and updated information in key areas.[Footnote 28]
In our previous work, we have identified elements of sound planning
that facilitate effective project management. Sound planning practices
include identifying and documenting specific activities needed to
achieve project goals. They also include documenting when work
activities will occur, how long they will take, and how they are
related to one another.[Footnote 29] VA's project plans include key
elements of sound planning, such as clearly stating the purpose and
strategy, including the goals and objectives, of the revision project.
However, VA has not taken several key steps that may be critical to
completing and maintaining an updated rating schedule, such as
planning for earnings loss and validation studies, developing a
strategy for implementing revisions, and adopting a formal policy for
regular updates in the future (see table 2). Regarding an
implementation strategy, for example, if revisions to the mental
health rating criteria resulted in upward adjustments of the ratings,
VA would re-rate those veterans with mental health disabilities,
according to VA officials. As noted previously, the earnings study
being used by VA to update the mental health rating criteria showed
the veterans with those conditions are likely undercompensated. As of
the end of fiscal year 2011, 878,417 or 6.7 percent of those
disabilities for which veterans received benefits were mental health
conditions. Any effort to re-rate those cases likely represents a
significant workload increase. Some experts we interviewed recommended
that VA immediately develop a written strategy for implementing these
revisions to help ensure that veterans do not experience any negative
service-delivery consequences, such as increased wait times for
disability benefits.
Table 2: Key Steps Missing from VA's Project Planning:
Information in key areas: Earnings loss updates;
Steps not taken: VA does not have a complete plan--containing specific
activities and time frames--for conducting earnings loss studies for
all body systems in the rating schedule. VA's project plans are
missing details and updated time frames associated with a number of
critical steps, such as finalizing contracts with research
organizations. VA project plans are also missing descriptions of the
activities and time frames for conducting validation studies;
Why is this important? VA officials stated that conducting earnings
loss analyses are necessary to make knowledge-based adjustments to the
rating schedule, a practice consistent with recommendations from
expert panels and our prior work. VA officials said that validation
studies are an integral part of the earnings update process.
Information in key areas: Implementation strategy;
Steps not taken: VA has not developed a written strategy for
addressing the full range of effects that revisions to the rating
schedule may have on agency operations, which may include increased
staff and resource needs, reconfiguring staff duties, and developing a
plan for training and developing new procedures. VA has not yet
assessed possible effects of revisions on agency operations or
documented activities that need to occur, according to VA officials;
Why is this important? VA should be proactively assessing potential
impacts of any revisions and developing plans for implementation,
according to some experts we interviewed. VA officials told us they
recognize the need to do this. If the current revisions resulted in
higher disability ratings for conditions affecting a significant
number of veterans, this could negatively impact VA's claims
processing workload. VA's disability claims system already has a
substantial backlog, and changes to the rating schedule may pose an
administrative burden.[A] It is important that agencies clearly
document activities, particularly to help manage change to cope with
shifting environments and evolving demands and priorities.[B]
Information in key areas: Regular updates;
Steps not taken: Although VA intends to continue comprehensive
revisions beyond the completion of the current project, it lacks a
formal policy, procedure, or mechanism committing itself to doing
so.[C] VA has not established a policy--through regulation, policy
manual, or other means--for the continuation of the revision project
in the future. VA officials told us they intend to use lessons learned
from the current process to guide future efforts, but are not
currently documenting these to inform a formal policy.[D]
Why is this important? Many experts and veteran groups we interviewed
said it is important that VA continue to update the rating schedule in
the future. Several commission reports, including the Institute of
Medicine's, recommended that VA update the rating schedule at regular
intervals to serve veterans with disabilities more effectively and
equitably. It is important that agencies establish policies,
procedures, and mechanisms that enforce management's directives.
Source: GAO analysis of VA documents, interviews with VA officials and
experts, and GAO guidance and prior work related to internal controls.
[A] In 2010, we found that VA's disability claims and appeals
processing had improved in some aspects and worsened in others. In
recent years, the number of claims completed annually by VA has
increased but not by enough to keep pace with the increasing number of
compensation claims received, resulting in more claims awaiting a
decision. GAO, Veterans' Disability Benefits: Further Evaluation of
Ongoing Initiatives Could Help Identify Effective Approaches for
Improving Claims Processing, GAO-10-213 (Washington, D.C.: Jan. 29,
2010).
[B] See GAO, [hyperlink, http://www.gao.gov/products/GAO/AIMD-00-
21.3.1.
[C] In 2002, we found that VA did not have a well-defined plan to
conduct future medical criteria updates. At the time, VA provided us
with a statement acknowledging the need to re-review the medical
criteria in the future, but had neither a time frame nor strategy for
completing the task. See GAO, SSA and VA Disability Programs: Re-
Examination of Disability Criteria Needed to Help Ensure Program
Integrity, GAO-02-597 (Washington, D.C.: Aug. 9, 2002).
[D] In July 2012, VA stated that they are taking steps to update their
current project management plan to include future reviews of each body
system every 5 years.
[End of table]
Selected Policy Approaches for Updating VA's Benefit Structure Present
Both Opportunities and Challenges:
Three key approaches for modernizing VA's disability programs--as
recommended by disability commissions and others--present
opportunities and challenges. These approaches are (1) providing
quality of life payments, (2) providing integrated vocational services
with transitional cash assistance, and (3) factoring the effects of
assistive technology and medical interventions systematically into
rating decisions. See figure 3 for an overview of what VA does now and
what these approaches would do. Those we interviewed said to varying
degrees that the approaches could provide more equitable compensation
and that approaches two and three could better help veterans integrate
into the workforce and society. At the same time, however, experts and
veteran groups identified administrative, political feasibility, and
cost challenges, among others. Nevertheless, some experts said that
combining the approaches could create a more integrated, comprehensive
benefits package and could also mitigate challenges associated with
any one approach. When considering such large-scale policy changes, we
have previously identified strategies for policymakers to use to
develop specific policy proposals. In translating broad policy
approaches or concepts--including the three outlined below--into
specific proposals, policymakers will need to define key design
features (e.g., eligibility requirements and the type and timing of
payments). For a summary of key questions raised during our
discussions with experts and veteran groups about the possible design
of the approaches, see appendix III.
When assessing these policy approaches, one must keep in mind that
VA's disability compensation program is a statutory scheme with
parameters set forth in federal law. This statutory scheme restricts
the extent to which VA can reform its disability program, as there are
many actions VA cannot take without Congress amending the relevant
laws. For example, under 38 U.S.C. § 1155, VA is required, as far as
is practicable, to base its disability ratings on the average
impairments of earning capacity resulting from various types of
injuries. This provision essentially prohibits VA from basing
disability ratings (or a portion of the ratings) on a loss of quality
of life, thus making the first policy approach discussed below legally
impossible without a statutory change.
Figure 3: Overview of What VA Does Now and the Modified Approaches:
[Refer to PDF for image: illustration]
Providing quality of life payments:
What VA does now:
VA provides a payment for average loss in earning capacity to veterans
with service-connected disabilities.
What the modified approach would do:
Explicitly provide a payment for loss in quality of life to veterans
with service-connected disabilities (also referred to as "noneconomic
loss" payments).
Providing integrated vocational services with transitional cash
assistance:
What VA does now:
VA provides vocational rehabilitation services as well as educational
benefits. However, commissions have raised concerns that vocational
rehabilitation is neither a main focus nor integrated with disability
compensation decisions. Veterans must first receive a disability
rating before applying, at their own discretion, for vocational
rehabilitation services. As a consequence, veterans may apply for and
receive monthly disability compensation for a medical condition and
never seek VA vocational services.
What the modified approach would do:
VA would integrate its vocational services with disability
compensation decisions. VA would provide earlier assistance and
transition payments during a vocational rehabilitation and training
period. At the end of this period, permanent VA payments for average
earnings loss would begin to make up for any remaining reduced earning
capacity.
Factoring assistive technology and medical interventions into rating
decisions:
What VA does now:
Medical interventions and assistive devices are currently incorporated
into the rating schedule for some medical diagnoses, according to VA
officials. For example, the rating schedule contains a section on
prosthetic implants, like hip replacements. However, VA does not
systematically factor in the increased functional capacity of veterans
afforded by assistive technology and treatment when making an initial
disability assessment.
What the modified approach would do:
Systematically factor in the increased functional capacity of veterans
afforded by assistive technology when VA makes disability assessments.
Source: GAO analysis of VA program information and relevant reports by
disability commissions, task forces, committees, and GAO.
Note: Regarding the integrated vocational services with transitional
cash assistance approach, the Dole-Shalala Commission stated that the
goal of VA's disability program should be to return veterans to normal
activities, if feasible, as quickly as possible. The commission
recommended integrating vocational rehabilitation with transition
payments into the VA disability compensation system. According to VA
officials, Congress and VA have made efforts to address issues related
to the timing and incentives for rehabilitation for wounded
servicemembers. For example, according to VA, the National Defense
Authorization Act for Fiscal Year 2008 established Vocational
Rehabilitation and Employment eligibility for severely injured active
duty individuals before a VA rating is issued. In addition, VA is
initiating the Integrated Disability Evaluation System (IDES) that
provides Vocational Rehabilitation and Employment outreach and
transition services to active duty servicemembers at 48 IDES
installations. This outreach includes a mandatory meeting with a
Vocational Rehabilitation and Employment counselor.
[End of figure]
Selected Policy Approaches Hold Opportunities, but Would Present
Challenges:
Quality of Life Payments:
According to several of the experts and veteran groups we interviewed,
quality of life payments could better align VA's compensation program
with more current thinking about disability while simultaneously
providing greater equity to VA's disability compensation program.
[Footnote 30] In general, experts and veteran groups we interviewed
said that a payment for quality of life held more opportunity than the
other proposed approaches to update the nation's veteran benefits
program. However, they also cited challenges relating to its
implementation and fiscal sustainability, as shown in figure 4.
Figure 4: Experts' and Veteran Groups' Views on Potential
Opportunities and Challenges of Providing a Quality of Life Payment:
[Refer to PDF for image: illustration]
Opportunities: as cited by experts and/or veterans groups:
* Recognition of loss beyond earnings:
Would acknowledge the impact of a disability on a veteran's life
beyond earnings, which reflects a more modern view of disability.
* A systematic and equitable approach:
Would develop a systematic and equitable approach for providing
quality of life compensation to veterans experiencing such losses.
* Existing tools to measure loss of quality of life:
Could develop approaches to determine whether a veteran has a loss in
quality of life using existing tools or methodologies.
Challenges: as cited by experts and/or veterans groups:
* Change in law and administrative limitations:
Would require a change in law to expand the purpose of veteran
disability compensation. Moreover, expanding the program's purpose
could increase the scope and time required to conduct disability
assessments, which may contribute to existing claims backlogs.
* Difficulties assigning compensation:
While quality of life tools and methodologies exist, they are not
designed to assign dollar values for different degrees of loss.
Further work is needed to develop these methods and tools for
compensation purposes.
* Program costs:
Adding a new payment category could have potential short- and long-
term cost implications, although exact values are unclear.
Source: GAO summary of experts' and veterans groups' views.
[End of figure]
In terms of opportunities, a payment for veterans' loss in quality of
life might help align the program with more current thinking about
disability by recognizing the impact of illness or injury beyond loss
in earnings. Along these lines, many experts and veteran groups said
that loss in earnings and quality of life should be explicitly
integrated into the compensation program to recognize the overall
impact of disability on veterans. For example, veterans who lose a
hand may be able to work in today's economy, but the injury could
prevent them from tossing a football with their children or engaging
in other life activities. Most of those we interviewed agreed with
commissions and experts who concluded that a modern program should
compensate veterans with disabilities for losses beyond their
earnings, even though the current program is designed to compensate
based on economic losses.
According to several experts, VA has an opportunity to develop a
systematic approach to more equitably award quality of life
compensation. According to these experts, VA currently provides
implicit quality of life benefits to some veterans with service-
connected disabilities but not others.[Footnote 31] For example,
several experts argued that some veterans may receive compensation for
impairments in the rating schedule that have little, if any,
associated earnings loss.[Footnote 32] Several experts added that, in
considering a quality of life payment, VA needs to determine the
degree to which the rating schedule already includes consideration of
the effect of a disability on quality of life. Two experts we
interviewed said that benefits currently provided to veterans outside
of the rating schedule, such as enhanced monthly compensation
payments, could be viewed as compensation for loss in quality of life.
[Footnote 33]
While this approach presents opportunities, it could prove challenging
because it would require a change in law and could create a more
complex system, according to several of those we interviewed.
Congress, they noted, would likely need to revise the statute to
expand the purpose of disability compensation to include quality of
life. And if the program's purpose is expanded, VA would need to
determine how to make fair, timely, and accurate payments but not
exacerbate the existing claims backlog, according to several experts
and veteran groups we interviewed. Specifically, adding a quality of
life assessment might require additional time to assess claims and
create another avenue for appeals. Further, VA would need to address
how to adjust compensation for any changes in a veteran's quality of
life loss over time, according to VA.
Another implementation challenge is how to measure quality of life--a
subjective judgment--and assign a dollar value to different degrees of
these losses. Two veterans with the same service-connected illness or
injury may experience pain, social difficulties, and other intangible
impacts that, depending on their circumstances and characteristics,
may result in different degrees of losses in quality of life.
According to several experts and veteran groups, a number of tools
exist to make the process more objective. For example, CNA surveyed
veterans with and without service-connected disabilities to show
differences in quality of life loss between the two groups. While
losses in quality of life can be measured, a process to attach a
dollar value will need to be developed and refined, according to
several experts and veteran groups, because none of the existing tools
are intended to determine levels of compensation. Also, several
experts suggested that VA could use benchmarks, such as the
compensation provided by other countries' programs.
Finally, many experts added that quality of life payments would
increase program costs. In the short term, VA would likely need
additional funds to cover the costs of researching and developing
assessment tools and for training staff on new procedures. In the long
term, according to experts and veteran groups, veterans may receive
increased levels of compensation, which could also affect the
program's long-term cost. Any increased costs would need to be
considered in the context of our nation's current and future fiscal
challenges. However, several experts noted that quality of life
payments could offset any reduced compensation for service-connected
conditions that have no associated earnings loss, subsequently
resulting in total compensation remaining level.
Providing Integrated Vocational Services with Transitional Cash
Assistance:
Several of the experts we interviewed stated that a key goal for VA
should be helping veterans with disabilities return to the workforce.
Moreover, they identified this approach as an opportunity to provide
early assistance to help veterans achieve their full work potential.
However, experts and veteran groups suggested that moving forward with
this approach would present challenges, such as gaining consensus for
the approach and its potential cost, as shown in figure 5.
Figure 5: Experts' and Veteran Groups' Views on Potential
Opportunities and Challenges of Providing Integrated Vocational
Services along with Transitional Cash Assistance:
[Refer to PDF for image: illustration]
Opportunities: as cited by experts and/or veterans groups:
* Early vocational interventions:
Could provide rehabilitation and training soon after a veteran incurs
a disability to improve a veteran's capacity to work.
* Encourage work:
Would place greater emphasis on building a veteran's capacity to work
rather than income support while maintaining cash benefits for
veterans in need.
Challenges: as cited by experts and/or veterans groups:
* Lack of consensus:
Obtaining consensus might be difficult, particularly if this
assistance is linked to rating decisions.
* Capacity limitations:
VA might not have the capacity to conduct additional vocational
assessments.
* Program costs:
Adding a new payment category and expanding current rehabilitation
programs could have potential cost implications.
Source: GAO summary of experts' and veteran groups' views.
[End of figure]
According to several experts we interviewed, the goal of VA's
disability program should be to build a veteran's capacity to work
rather than mainly providing income support or cash benefits.[Footnote
34] These experts said that participation in work leads to better
integration into civilian life and other intangible benefits like
greater satisfaction and self-esteem. In addition, several experts
suggested that, if vocational assistance increases a veteran's earning
capacity, VA should consider that when determining losses in earnings.
That is, veterans should be rated after they reach maximum medical
improvement.[Footnote 35] However, several cautioned that VA should
maintain protections for veterans with service-connected disabilities
who may not succeed at work even after extensive assistance.
According to many experts we interviewed, this policy approach could
enhance veterans' capacity to work by providing earlier vocational
assistance after the onset of disability rather than after a veteran
has been rated for disability compensation. Experts we interviewed
cited several benefits of early vocational assistance. For example,
they said that it improves the likelihood that veterans with service-
connected disabilities will obtain and retain employment after injury.
At the same time, achieving consensus for this approach may be
difficult. Several of those we interviewed suggested that the approach
does not provide much additional incentive to participate in
rehabilitation. For example, veterans already have access to
employment and training services, and many veterans work with or
without these services.[Footnote 36] While veteran groups we spoke
with said they support rehabilitation services, they would not favor
this policy shift if it means that a veteran's disability payment may
be reduced because of increased vocational capacity. They maintained,
in fact, that a veteran whose work potential was increased or who
completed the program should receive the same level of compensation he
or she would have received had he or she not received services.
Officials from two veteran groups also said that these services should
not be mandatory. In addition, while this approach would target
veterans of working age, several of the experts' and veteran groups'
views differed on whether the approach should target veterans at any
point after military discharge and/or veterans shortly after
discharge, particularly those with no or little civilian work history.
[Footnote 37]
Several veteran groups and experts also expressed concerns about VA's
capacity to administer this approach. For example, they said that VA
does not have sufficient numbers of staff capable of assessing a
veteran's vocational capacity or providing work supports through its
current vocational program. Moreover, others noted that this reform
could divert resources from current VA management initiatives, such as
efforts to expedite the delivery of VA benefits to servicemembers and
veterans.
This approach also would likely have cost implications. In the short
term, VA would need to estimate costs, pilot the approach while
running VA's current programs, and then implement the program,
according to several of those we interviewed. Others said that there
could also be long-term cost implications if this approach required
resources in addition to those being expended under the current
program. According to two of those we interviewed, the ultimate costs
would depend on who is eligible for the services. For example,
limiting eligibility to veterans shortly after discharge would be less
costly than making services available to veterans at any point in time
after discharge.
Systematically Incorporate Assistive Technology and Medical
Interventions in Rating Decisions:
According to experts we interviewed, systematically incorporating the
effects of assistive technology and medical interventions into rating
decisions affords an opportunity to more accurately assess veterans'
impaired earning capacity, including the loss of functioning in the
workplace. Assistive technology and medical interventions include, for
example, a prosthetic device for walking, a device to assist with a
vision impairment, and medications for pain. However, they suggested
that implementing this approach would present challenges, such as its
acceptability among veterans and other stakeholders, as shown in
figure 6.
Figure 6: Experts' and Veteran Groups' Views on Potential
Opportunities and Challenges of Incorporating Assistive Technology and
Medical Interventions into Disability Rating Decisions:
[Refer to PDF for image: illustration]
Opportunities: as cited by experts and/or veterans groups:
* Accuracy:
May result in more accurate assessments of veterans' average earnings
losses and a closer relationship between VA disability ratings and
actual average loss.
* Equity:
Accurately measuring veterans' ability to function with personal and
environmental supports may result in less compensation for some
veterans, but allow VA to target resources to those with the greatest
earning loss.
Challenges: as cited by experts and/or veterans groups:
* Lack of consensus:
Obtaining consensus might prove difficult given different views about
the benefits of assistive technology.
These interventions affect individuals differently and may not work
for everyone.
* Disincentives:
Could introduce a disincentive for veterans to use supports and seek
treatment if this results in lower ratings and payments.
* Capacity limitations and costs:
Might complicate the rating system and increase assessment processing
time, contributing to existing backlogs. Would likely have upfront
costs, such as costs for training and higher administrative costs
because of additional time and skills needed for assessments.
Source: GAO summary of experts' and veteran groups' views.
[End of figure]
According to several experts we interviewed, factoring in these
advances may result in more accurate assessments of veterans' average
earnings losses. Advances in assistive technology and modern medicine
can help veterans with service-connected disabilities increase their
earnings by helping them more fully integrate into the workplace.
While assistive devices and medications can play a critical role in an
individual's ability to function, VA does not always consider them in
its assessment of disability. According to several experts we talked
with, accurately measuring veterans' ability to function with personal
and environmental supports may result in less compensation for certain
veterans. However, a couple of experts said that this may allow VA to
target resources to those with the greatest earnings losses.
While many of those we interviewed acknowledged the benefits of
assistive technology and medicine, many of those we interviewed and VA
officials expressed concerns with factoring assistive technology into
disability rating decisions, including the following:
* The effectiveness of assistive technology and medication is
difficult to demonstrate, or research is incomplete.
* The interventions affect individuals differently and may not work
for everyone. Also, the effectiveness of assistive technology varies
over the lifetime of an individual--for example, as a person ages and
experiences changes in musculature, their ability to compensate using
a prosthetic decreases. Others described assistive technology that did
not perform as expected.
* The incorporation of assistive technology into rating decisions
could introduce a disincentive for veterans to use such tools and
supports.
Many experts and veteran groups discussed challenges similar to those
raised with the other policy approaches, such as potentially needing
to administer new assessments and the associated upfront costs. In
particular, individually assessing veterans would add complexity to a
ratings process that already faces challenges with making timely and
accurate rating decisions. For example, VA may need to determine
whether veterans are making good faith efforts to use interventions
when making disability assessments, according to two of those we
interviewed. In addition, to assess a veteran's ability to function
while using these interventions, VA would need to hire staff with
necessary skills. To address some of these challenges, several experts
said that VA's planned studies to measure earnings loss would
automatically factor in the average economic benefits of assistive
technology use without needing a new assessment. However, one expert
cautioned that this approach might not be as precise as an individual
assessment.
Experts and Veteran Groups Discussed Combining Selected Policy
Approaches:
According to several of those we interviewed, policymakers could
create a comprehensive benefits package for individual veterans by
integrating compensation with vocational training and treatment.
Several experts outlined a sequence for implementing the approaches to
improve the timing of benefits and provide seamless support to
veterans. Initially, VA would provide financial support during a
temporary medical and vocational rehabilitation period to maximize a
veteran's recovery. This temporary period would be followed by long-
term compensation for any reduced earnings loss. In conjunction with
these payments, veterans would receive an explicit quality of life
payment.
Several of the experts we talked to described potential benefits of
combining approaches. Specifically, VA may be able to:
* provide more equitable compensation and services to veterans by
examining the interactive effects of existing and new
approaches,[Footnote 38]
* clarify the distinction between compensation for earnings loss and
the other impacts of living with a disability, and/or:
* mitigate potential adverse effects associated with any single
approach. For example, if payments for average earnings loss were
reduced because the impact of assistive devices was incorporated,
adding an offsetting quality of life payment could ensure that future
veterans get sufficient compensation.
Several experts and veteran groups, however, did not necessarily
support combining the three approaches. Finally, if a comprehensive
program was targeted to new enrollees, VA may need to administer dual
programs.
Key Strategies to Consider in Updating VA's Disability Program for the
21st Century:
Although we and others have identified a need to reexamine federal
disability programs to meet the challenges and expectations of the
21st Century, VA officials said they are not currently considering the
three policy approaches discussed in this report. VA officials said
they have, however, kept abreast of all studies and recommendations
arising from the various commissions and reports. Further, they said
they have taken into consideration many of the recommendations made in
these studies. For example, VA is implementing recommendations to
comprehensively revise the rating schedule. Moreover, in 2008 VA
contracted with a private consultant to study disability compensation,
loss in quality of life, transition benefits for rehabilitation,
assistive technology, and other areas raised by the disability
commissions and our work. While their report proposed many specific
policy options to address these issues, it stated that the Congress
and VA needed to decide on the key goals of the approaches.[Footnote
39] Doing so would help further specify how to design and implement a
new approach. According to VA officials, they currently are not acting
on these approaches because they fall outside the VA's statutory
requirement to compensate veterans for average earnings loss. VA
officials said they will further consider new policy approaches at the
request of the Congress.
As our high-risk series notes, however, continued attention by the
Office of Management and Budget (OMB) and concerted efforts by
agencies, as well as sustained congressional attention, are critical
to fully resolve high-risk areas, which include federal disability
programs.[Footnote 40] Should the Congress choose to pursue
fundamental changes to the disability compensation program, with
assistance from VA, we have identified key reexamination strategies
that should be considered,[Footnote 41] such as:
* building support within the Congress, the Administration, the
agency, and the broader public to justify a reexamination of the
program.
* identifying the most important goals for the program and developing
specific policy proposals to meet those goals.
* choosing reexamination methods to guide the process and help
evaluate potential changes.[Footnote 42]
Conclusions:
The nation has a long-standing commitment to compensate veterans for
injuries or illnesses incurred during their military service. After
decades of recurring criticism that VA's rating schedule is out of
date, VA is now demonstrating a commitment to comprehensive revision
of its disability criteria and consideration of a more modern approach
to determining disability. VA faces challenges, however, that may
impede its ability to complete and implement the revisions.
Specifically, without sufficient capacity to conduct research on
earnings loss, VA may be unable to make fact-based and timely
revisions to its rating schedule. Moreover, incomplete plans for
conducting earnings loss and related studies could jeopardize project
outcomes and result in a rating schedule that remains, in the end,
outdated. In addition, without a written strategy for implementing the
revisions, VA might not be adequately positioned to mitigate possible
increases to the disability claims backlogs. This could increase
veterans' wait times for disability benefits, which runs counter to
one of the desired outcomes of the revision goal of improving claims
efficiency. Finally, in the absence of sustained, ongoing revisions
and adjustments, VA's rating schedule is increasingly at risk of not
reflecting advances in medicine and changes in the labor market.
Without a formal policy for conducting regular updates in the future,
VA may experience extended gaps in its efforts to revise the rating
schedule. Consequently, some future veterans may not receive the
appropriate level of compensation. We recognize that adjusting the
rating schedule and making changes to veterans' disability benefits
can be contentious. Stakeholders have different views about how to
define disability, measure the loss of earning capacity, and even the
purpose of veterans' disability compensation. Nevertheless, without a
rating schedule that reflects advances in medicine and changes in the
labor market, VA may continue to overcompensate some veterans while
undercompensating others.
As underscored by the policy approaches recommended by previous
commissions and other experts, current thinking on disability has
outpaced consideration of updates to VA's disability compensation
benefits structure. Changes in our understanding of disability and the
economy create a compelling case for the Congress, VA, and
stakeholders to reexamine the goals of VA's disability compensation
programs and how to best serve veterans with service-connected
disabilities. This examination would raise important, but difficult,
questions: Should veterans with disabilities be compensated for more
than loss of earning capacity? Should the discussion of disability
benefits structure be intertwined with efforts to build a veteran's
capacity to work and provide work supports? Should some compensation
be considered temporary? Should any proposed disability compensation
changes apply to existing and/or future veterans? VA officials are
giving little attention to these larger issues, and the trade-offs
involved. However, a system that maximizes equity, balances fiscal
pressures, and ultimately serves individual veterans effectively will
benefit from deliberations informed by more modern views about
disability. VA has signaled that, absent further direction from the
Congress, it will focus its efforts within its current framework.
Without a broader perspective, VA may miss the opportunity to be an
agent in its own transformation to the benefit of those it serves.
Matter for Congressional Consideration:
To the extent that Congress wishes to consider various options to
modernize VA's disability benefits program, Congress could direct the
VA to conduct focused studies on these or other policy approaches and,
if necessary, propose relevant legislation for congressional
consideration. For example, providing explicit quality of life
payments, or some other combination of policy changes, to veterans
with service-connected disabilities may help to modernize VA's
program, but such changes need further study to determine their
feasibility and fiscal impact.
Recommendations for Executive Action:
Based on our review, we are making three recommendations.
1. To ensure that decisions about veteran disability compensation
benefits are informed by current earnings loss information, we
recommend that the Secretary of Veterans Affairs:
* take necessary steps to increase research capacity to determine the
impact of impairments on earnings in a timely manner and:
* develop a more complete plan for conducting earnings loss and
validation studies for the entire rating schedule.
2. To ensure that VA is positioned to seamlessly implement revisions
to the rating schedule, we recommend that the Secretary of Veterans
Affairs develop a written implementation strategy. This strategy could
include steps to mitigate the possible effects of rating schedule
revisions on agency operations, including an increase in the number of
claims received.
3. To ensure the rating schedule revisions are sustained beyond the
current update project, we recommend that the Secretary of Veterans
Affairs establish a formal policy, procedure, or mechanism to revise
the rating schedule--with updated medical and earnings loss
information--at regular intervals.
Agency Comments and Our Evaluation:
We provided a draft of this report to VA for review and comment. VA
concurred with our recommendations and indicated it will take steps to
address them by a target completion date of August 31, 2013. Its
written comments are reproduced in appendix IV. VA also provided
technical comments that we incorporated, as appropriate.
VA agreed with our recommendation to take necessary steps to increase
its research capacity to determine the impact of impairments on
earnings in a timely manner and develop a more complete plan for
conducting earnings loss and validation studies for the entire rating
schedule. VA stated that it is exploring the option of engaging in
research partnerships to conduct more than one earnings loss study at
a time. After exploring this and any other appropriate options, we
encourage VA to take all necessary actions to ensure it conducts
earnings loss studies in a timely manner, now and in the future. In
addition, VA stated that it will expand its current project management
plan to include milestones, deliverables, and the designation of a sub-
program manager to manage the earnings loss and validation studies.
VA also agreed with our recommendation to develop a written
implementation strategy that could include steps to mitigate the
possible effects of rating schedule revisions on agency operations,
including an increase in the number of claims received. VA stated
that, going forward, it will develop a formal plan that establishes
cross-functional teams representing all business processes and
procedural functions involved in the rating schedule changes. VA
acknowledged that now is the time to standardize a process for
implementing the rating schedule revisions.
Finally, VA agreed with our recommendation to establish a formal
policy, procedure, or mechanism to revise the rating schedule with
updated medical and earnings loss information at regular intervals.
According to VA, it is currently formulating a plan that evaluates the
rating schedule revision process, which will allow VA's Compensation
Service to establish a formal, continuous revision policy that is
efficient, traceable, and transparent to produce a rating schedule
that reflects up-to-date medical information.
We are sending copies of this report to the appropriate congressional
committees; the Secretary of Veterans Affairs; and other interested
parties. In addition, the report is available at no charge on the GAO
website at [hyperlink, http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me at (202) 512-7215 or bertonid@gao.gov. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this report. GAO staff who made key contributions
to this report are listed in appendix V.
Signed by:
Daniel Bertoni:
Director, Education, Workforce, and Income Security Issues:
List of Committees:
The Honorable Patty Murray:
Chairman:
The Honorable Richard Burr:
Ranking Member:
Committee on Veterans' Affairs:
United States Senate:
The Honorable Darrell Issa:
Chairman:
Committee on Oversight and Government Reform:
House of Representatives:
The Honorable Jeff Miller:
Chairman:
The Honorable Bob Filner:
Ranking Member:
Committee on Veterans' Affairs:
House of Representatives:
[End of section]
Appendix I: Scope and Methodology:
In this report, we (1) identified the progress that the Department of
Veterans Affairs (VA) has made in revising the criteria used to
determine eligibility for veterans' disability benefits with updated
medical and economic information, and (2) discussed the opportunities
and challenges associated with selected policy approaches that
disability commissions and others have raised for updating VA's
disability benefits structure. Overall, we reviewed prior GAO,
disability commission, and committee reports; relevant federal laws
and regulations; program documentation, including policies,
procedures, strategic goals, and supporting project plans; and
congressional testimonies from disability groups and commissions. We
also interviewed VA officials, key stakeholders, disability experts,
and representatives of veteran groups.
To address our first reporting objective, we reviewed VA's strategic
goals, plans, policies, Federal Register notices, and other relevant
program documentation and interviewed VA officials. We also reviewed
VA's Advisory Committee on Disability Compensation reports,
recommendations, and meeting minutes and presentations on the rating
schedule updates. In addition, we interviewed several Advisory
Committee on Disability Compensation members and reviewed reports and
interviewed experts from relevant organizations--such as the Institute
of Medicine--and veteran disability commissions--such as the Veterans
Disability Benefits Commission. We also evaluated VA's project
planning documents using established elements for sound planning.
Elements of Sound Planning:
To determine the extent to which VA's project plans to revise its
disability criteria included elements of sound planning, we relied on
project management practices in A Guide to Project Management Body of
Knowledge, our guidance on internal controls, and the Government
Performance and Results Act of 1993 (GPRA).[Footnote 43] We also
considered recent GAO work that evaluated federal planning efforts.
Through these efforts, we identified six elements for sound planning.
Although there is no established set of requirements for all project
plans, we determined that these elements of sound planning help
decision makers effectively shape policies, programs, priorities, and
resource allocations intended to help achieve desired results and
ensure accountability. While these elements may be organized in a
variety of ways and use different terms, for the purposes of this
report, we grouped them into six categories, from plan conception
through implementation, that represent sufficiently broad, higher-
level criteria that may apply to a wide variety of project plans and
priorities. (See table 3.)
Table 3: Six Elements of Sound Planning Used to Evaluate VA's Efforts:
Problem, goals, and methodology:
In establishing the problem, goals, and methodology, the agency
identifies the problem to be addressed and the causes of the problem,
as well as the strategy, including goal and objectives, and the
methodology for achieving these goals and objectives.
Activities and timelines:
An agency should identify and document the specific activities that
must be performed to complete the project. The agency should develop a
schedule that defines, among other things, when work activities will
occur, how long they will take, and how they are related to one
another, as well as interim milestones and checkpoints to gauge the
completion of the project.
Resources:
The agency should identify the sources and types of resources or
investments needed (e.g., budgetary, human capital, information
technology, research and development, contracts) to complete project
activities. If resource availability cannot be assured, the agency
will need to establish alternate plans. The agency should develop a
reliable estimate of the costs of these resources.
Coordination:
The agency should identify stakeholders--individuals and organizations
that are involved in or may be affected by project activities--and
ensure that they are included in developing and executing the project
plan, allowing them to contribute appropriately. In addition to
internal communications, management should ensure there are adequate
means of communicating with, and obtaining information from, external
stakeholders that may have a significant impact on the agency
achieving its goals.
Risk:
Risk assessment generally includes estimating the significance of
risks from both external and internal sources, assessing the
likelihood of its occurrence, and deciding how to manage the risk.
Performance evaluation:
The agency should describe how goals will be achieved and establish
performance indicators to be used in measuring or assessing the
relevant outputs, service levels, and outcomes of each program
activity, and identify a process to monitor and report on progress.
Source: GAO analysis based on the Program Management Institute
Information, the Government Performance and Results Act of 1993, and
selected GAO reports.
[End of table]
Selection and Expert Assessment of Policy Approaches:
To address our second reporting objective, we identified policy
approaches that could update VA's disability benefits structure by
conducting a literature search for relevant reports by disability
commissions, task forces, committees, and GAO. We selected approaches
from the following reports:
* Advisory Committee on Disability Compensation, Biennial Report dated
27, July 2010; Interim Report dated 7 July, 2009;
* CNA, Final Report for the Veterans' Disability Benefits Commission:
Compensation, Survey Results, and Selected Topics (August 2007);
* Economic Systems Inc., A Study of Compensation Payments for Service-
Connected Disabilities (September 2008);
* GAO, SSA and VA Disability Programs: Re-Examination of Disability
Criteria Needed to Help Ensure Program Integrity, GAO-02-597 (August
2002);
* Institute of Medicine, Committee on Medical Evaluation of Veterans
for Disability Compensation, A 21st Century System for Evaluating
Veterans for Disability Benefits and PTSD Compensation and Military
Service (2007);
* President's Commission on Care for America's Returning Wounded
Warriors (Dole-Shalala Commission), Serve, Support, Simplify: Report
of the President's Commission on Care for America's Returning Wounded
Warriors (July 2007); and:
* Veterans' Disability Benefits Commission, Honoring the Call to Duty:
Veterans' Disability Benefits in the 21st Century (October 2007).
These sources offered numerous recommendations intended to improve
VA's disability benefits structure. We assumed that these high-level
commissions and review groups had identified many of the major policy
approaches to update VA's disability benefits structure. We limited
selection of policy approaches to those that address more broadly
focused updates to VA's current disability benefits structure, such as
changes to the type, timing, or conditions of disability benefits
(e.g., levels of benefits and changes in legislative authorities) and
those that align with modern concepts of disability. For example,
policy approaches of relevant scope would be those that facilitate the
participation of people with disabilities in the workforce and society
by evaluating and addressing environmental factors that can hinder
employment and other activities. For this review, we excluded
recommendations aimed at VA's organizational structure, administrative
processes, and management operations (e.g., developing and using
performance metrics and improving processes for communicating with
veterans).
Applying these criteria, we identified three relevant policy
approaches: (1) providing quality of life payments, (2) providing
integrated vocational services with transitional cash assistance, and
(3) systematically factoring assistive technology and medical
interventions into rating decisions. To identify other policy
approaches, we asked 16 experts and veteran groups what other policy
approaches, if any, might improve VA's disability benefits structure.
Of those we interviewed, most said that the policy approaches we
selected were the relevant approaches for our research purposes.
Selection of Experts:
To obtain information from experts and veteran groups on the
opportunities and challenges associated with each approach, we
developed a list of semi-structured interview questions. We conducted
several pretests of the interview questions to validate its structure
and ensure the clarity and logical sequence of the questions asked.
During each semi-structured interview, we obtained information from
experts and veteran groups on several topics, including their general
assessments of the fiscal sustainability, political and administrative
feasibility, and effectiveness of each approach. In addition, we
obtained experts' and veteran groups' views on design features--such
as eligibility criteria and the type and duration of payments--that
could be considered part of each policy approach. We also obtained
experts' and veteran groups' perspectives on the need, if any, to
combine two or more policy approaches. Finally, we analyzed the
information obtained from experts and veteran groups to identify
underlying opportunities and challenges associated with each policy
approach.
We selected a nongeneralizable sample of experts who had participated
in disability commissions, research, or a congressional hearing on the
topic, or who serve in an organization that represents veterans with
disabilities. In addition, we selected a group of experts to help
ensure a range of viewpoints. Although many points of view were
represented by our experts, they may not represent the complete range
of opinions on the policy approaches. Table 4 identifies the experts
and veteran groups we interviewed, including their respective title
and professional affiliation.
Table 4: Experts and Veteran Groups Interviewed by GAO:
Name and title: Carl Blake, National Legislative Director;
Current affiliation: Paralyzed Veterans of America.
Name and title: Lonnie R. Bristow, Former President;
Current affiliation: American Medical Association.
Name and title: John F. Burton, Jr., Professor Emeritus;
Current affiliation: Rutgers University and Cornell University.
Name and title: Edward Eckenhoff, Founder and President Emeritus;
Current affiliation: National Rehabilitation Hospital Network.
Name and title: Bob Epley, Independent Consultant;
Current affiliation: VA Advisory Committee on Disability Compensation.
Name and title: Howard H. Goldman, Professor of Psychiatry;
Current affiliation: University of Maryland, School of Medicine.
Name and title: Barry A. Jesinoski, Executive Director;
Current affiliation: Disabled American Veterans.
Name and title: George Kettner, President;
Current affiliation: Economic Systems Inc.
Name and title: Michael McGeary, Senior Program Officer;
Current affiliation: Institute of Medicine.
Name and title: Lori Perkio, Assistant Director;
Current affiliation: The American Legion.
Name and title: Sally Satel, Resident Scholar;
Current affiliation: American Enterprise Institute.
Name and title: David Stapleton, Senior Fellow;
Current affiliation: Mathematica Policy Research.
Name and title: Tom Tarantino, Deputy Policy Director;
Current affiliation: Iraq and Afghanistan Veterans of America.
Name and title: Rick Weidman, Executive Director for Policy and
Government Affairs;
Current affiliation: Vietnam Veterans of America.
Name and title: Ray Wilburn, Senior Analyst;
Current affiliation: CNA.
Name and title: Gail R. Wilensky, Senior Fellow;
Current affiliation: Project HOPE.
Source: GAO.
[End of table]
[End of section]
Appendix II: Comprehensive Revisions and Other Key Updates to the VA
Schedule for Rating Disabilities (VASRD):
Body system: Musculoskeletal;
Most recent comprehensive body system update (Final rule source):
1945[A];
Most recent noncomprehensive revision to diagnostic codes (since last
comprehensive update) (Final rule source): 2005; (70 Fed. Reg. 75,399,
Dec. 20, 2005);
Nature of noncomprehensive change: Reference to conditions to be rated
analogously to diagnostic code for atrophic rheumatoid arthritis was
revised.
Body system: Muscle Injuries Section;
Most recent comprehensive body system update (Final rule source): 1997;
(Major Revision - 62 Fed. Reg. 30,235, June 3, 1997);
Most recent noncomprehensive revision to diagnostic codes (since last
comprehensive update) (Final rule source): Not applicable (n/a);
Nature of noncomprehensive change: n/a.
Body system: Digestive;
Most recent comprehensive body system update (Final rule source): 1945;
Most recent noncomprehensive revision to diagnostic codes (since last
comprehensive update) (Final rule source): 2001; (66 Fed. Reg. 29,486,
May 31, 2001);
Nature of noncomprehensive change: Revision of diagnostic codes for
residuals of injury and cirrhosis of the liver and revision to weight
loss regulation.
Body system: Neurological Conditions and Convulsive Disorders;
Most recent comprehensive body system update (Final rule source): 1961;
Most recent noncomprehensive revision to diagnostic codes (since last
comprehensive update) (Final rule source): 2011; (76 Fed. Reg. 78,824,
Dec. 20, 2011);
Nature of noncomprehensive change: Revised rating criteria for
amyotrophic lateral sclerosis.
Body system: Dental and Oral Conditions;
Most recent comprehensive body system update (Final rule source): 1994;
(59 Fed. Reg. 2530, Jan. 18, 1994);
Most recent noncomprehensive revision to diagnostic codes (since last
comprehensive update) (Final rule source): 1997; (62 Fed. Reg. 8201,
Feb. 24, 1997);
Nature of noncomprehensive change: Relocated portions pertaining to
noncompensable conditions to Part 3.
Body system: Genitourinary;
Most recent comprehensive body system update (Final rule source): 1994;
(59 Fed. Reg. 2523, Jan. 18, 1994);
Most recent noncomprehensive revision to diagnostic codes (since last
comprehensive update) (Final rule source): 1994; (59 Fed. Reg. 46,339,
Sept. 8, 1994);
Nature of noncomprehensive change: Note regarding entitlement to
Special Monthly Compensation (SMC) for deformity of the penis with
loss of erectile power, testis atrophy and removal.
Body system: Gynecological Conditions/;
Disorders of the Breast;
Most recent comprehensive body system update (Final rule source): 1995;
(60 Fed. Reg. 19,851, April 21, 1995);
Most recent noncomprehensive revision to diagnostic codes (since last
comprehensive update) (Final rule source): 2002; (67 Fed. Reg. 6874,
Feb. 14, 2002; corrected by 67 Fed. Reg. 37,695, May 30, 2002);
Nature of noncomprehensive change: Entitlement to SMC for loss of a
breast.
Body system: Hemic/Lymphatic;
Most recent comprehensive body system update (Final rule source): 1995;
(60 Fed. Reg. 49,227, Sept. 22, 1995);
Most recent noncomprehensive revision to diagnostic codes (since last
comprehensive update) (Final rule source): 2012; (77 Fed. Reg. 6467,
Feb. 8, 2012);
Nature of noncomprehensive change: Diagnostic code for AL amyloidosis
(primary amyloidosis) was added.
Body system: Mental Health;
Most recent comprehensive body system update (Final rule source): 1996;
(71 Fed. Reg. 52,695, Oct. 8, 1996);
Most recent noncomprehensive revision to diagnostic codes (since last
comprehensive update) (Final rule source): 2009; (74 Fed. Reg. 18,467,
Apr. 23, 2009);
Nature of noncomprehensive change: Post-traumatic stress disorder
nomenclature change.
Body system: Endocrine;
Most recent comprehensive body system update (Final rule source): 1996;
(61 Fed. Reg. 20,446, May 7, 1996);
Most recent noncomprehensive revision to diagnostic codes (since last
comprehensive update) (Final rule source): n/a;
Nature of noncomprehensive change: n/a.
Body system: Infectious Diseases, Immune Disorders and Nutritional
Deficiencies;
Most recent comprehensive body system update (Final rule source): 1996;
(61 Fed. Reg. 39,875, July 31, 1996);
Most recent noncomprehensive revision to diagnostic codes (since last
comprehensive update) (Final rule source): n/a;
Nature of noncomprehensive change: n/a.
Body system: Respiratory System;
Most recent comprehensive body system update (Final rule source): 1996;
(61 Fed. Reg. 46,720, Sept. 5, 1996);
Most recent noncomprehensive revision to diagnostic codes (since last
comprehensive update) (Final rule source): 2006; (71 Fed. Reg. 52,457,
Sept. 6, 2006); (71 Fed. Reg. 28,586, May 17, 2006);
Nature of noncomprehensive change: Substantive revisions to the
evaluation criteria for certain respiratory and cardiovascular
conditions, hypertension with heart disease; amended provisions
pertaining to tuberculosis for those entitled on August 19, 1968.
Body system: Cardiovascular;
Most recent comprehensive body system update (Final rule source): 1997;
(62 Fed. Reg. 65,207, Dec. 11, 1997);
Most recent noncomprehensive revision to diagnostic codes (since last
comprehensive update) (Final rule source): 2006; (71 Fed. Reg. 52,460,
Sept. 6, 2006);
Nature of noncomprehensive change: Substantive revisions to the
evaluation criteria for respiratory and cardiovascular conditions,
hypertension with heart disease.
Body system: Impairment of Auditory Acuity;
Most recent comprehensive body system update (Final rule source): 1999;
(64 Fed. Reg. 25,210, May 11, 1999);
Most recent noncomprehensive revision to diagnostic codes (since last
comprehensive update) (Final rule source): 2003; (68 Fed. Reg. 25,822,
May 14, 2003);
Nature of noncomprehensive change: Amendment on the evaluation of
tinnitus.
Body system: Skin;
Most recent comprehensive body system update (Final rule source): 2002;
(67 Fed. Reg. 49,590, July 31, 2002; corrected by 67 Fed. Reg. 58,448,
Sept. 16, 2002);
Most recent noncomprehensive revision to diagnostic codes (since last
comprehensive update) (Final rule source): 2008; (73 Fed. Reg. 54,708,
Sept. 23, 2008; corrected by 77 Fed. Reg. 2910, Jan. 20, 2012);
Nature of noncomprehensive change: Modified evaluation of scars.
Body system: Organs of the Special Sense;
Most recent comprehensive body system update (Final rule source): 2008;
(73 Fed. Reg. 66,543, Nov. 10, 2008);
Most recent noncomprehensive revision to diagnostic codes (since last
comprehensive update) (Final rule source): n/a;
Nature of noncomprehensive change: n/a.
Source: GAO analysis of VA information and Institute of Medicine
report, verified by VA officials.
[A] According to the Institute of Medicine report, the "Spine" section
was comprehensively updated in 2003 (68 Fed. Reg. 51,454, Aug. 27,
2003).
[End of table]
[End of section]
Appendix III: Key Questions for Designing New Disability Compensation
Programs:
Transforming broad policy approaches into specific programs requires
that design features be defined. In reference to VA's disability
program for veterans, the features relate to the form, amount, and
eligibility for the payments and services. The following summarizes
key questions raised during our discussions with experts and veteran
groups about the possible design of programs for providing quality of
life payments, providing integrated vocational services with
transitional cash assistance, and factoring the effects of assistive
technology and medical interventions systematically into rating
decisions.
Quality of life payments:
* Should existing veterans be eligible for quality of life payments or
just new enrollees?
* Should veterans have the opportunity to opt in or out of a new
program that provides quality of life payments?
* Should quality of life payments supplement earnings loss payments
for veterans with low, high, or all disability ratings levels?
* Should disability compensation be based primarily on quality of
life, with earnings loss payments being made only when actual earnings
loss occurs?
* How frequently should quality of life payments be provided to
veterans (e.g., one-time lump sum, monthly annuity)?
* What system should be used to determine payment levels (e.g.,
individual assessments or an average loss in quality of life across a
group of veterans)?
* Should quality of life be inferred from impairment or measured
directly?
* For veterans receiving quality of life payments and earnings loss
payments, should the earnings loss payments end at retirement age?
Integrating vocational rehabilitation services with disability
compensation:
* Should all veterans be eligible for the program or just veterans
shortly after discharge?
* Should the program be available for veterans at all disability
rating levels or for veterans with lower or higher degrees of
disability?
* Should the program focus on veterans with certain kinds of
impairments?
* Should the payments be provided while the veteran participates in
vocational rehabilitation, education, or training programs (i.e., for
a longer rehabilitative period)? Or, should the payments also be
provided on a short-term basis to support a veteran's return to the
community?
* Should the loss of earnings be periodically reassessed following a
temporary rehabilitation period?
Assistive technology and medical interventions:
* Should VA assess the effects of assistive technology and medical
interventions during the disability examination process?
* Should an assessment of the effects of assistive technology and
medical interventions only be considered for future enrollees/veterans?
* Should VA incorporate the anticipated effects of assistive
technology and medical interventions only when a veteran actually uses
them?
* Should VA incorporate the estimated effects of assistive technology
and medical interventions?
* Should VA limit the incorporation of the effects of assistive
technology and medical interventions to those with empirically-based
demonstrations of their effectiveness?
[End of section]
Appendix IV: Comments from the Department of Veterans Affairs:
Department of Veterans Affairs:
Washington DC 20420:
August 21, 2012:
Mr, Daniel Bertoni:
Director, Education Workforce and Income Security Issues:
U.S. Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Mr. Bertoni:
The Department of Veterans Affairs (VA) has reviewed the Government
Accountability Office's (GAO) draft report, "VA Disability Compensation:
Actions Needed to Address Hurdles Facing Program Modernization”
(GA0,12-846). VA concurs with GAO's recommendations to the Department.
The enclosure specifically addresses each of GAO's recommendations and
provides technical comments to the draft report. VA appreciates the
opportunity to comment on your draft report.
Sincerely,
Signed by:
John R. Gingrich:
Chief of Staff:
Enclosure:
[End of section]
Enclosure:
Department of Veterans Affairs (VA) Comments to Government
Accountability Office (GAO) Draft Report "VA Disability Compensation:
Actions Needed to Address Hurdles Facing Program Modernization" (GAO-
12-846):
Recommendation 1: To ensure that decisions about veteran disability
compensation benefits are informed by current earnings loss
information, we recommend that the Secretary of Veterans Affairs: take
necessary steps to increase research capacity to determine the impact
of impairments on earnings in a timely manner; and develop a more
complete plan for conducting earnings loss and validation studies for
the entire rating schedule.
VA Response: Concur. Beginning in early June 2011, VA conducted market
research into the possibility of increasing our research capacity and
partnerships with research organizations. VA is exploring the option
of engaging in research partnerships to conduct more than one study at
a time to increase VA's research capacity. With regard to developing a
more complete and overall plan for the earnings loss studies, VA is
expanding the Project Management Plan (PMP) to include a specific
addendum that will include milestones, deliverables, and the
designation of a sub-program manager who is dedicated to managing the
earnings loss and validation studies, Targeted completion date is
August 31, 2013.
Recommendation 2: To ensure that VA is positioned to seamlessly
implement revisions to the rating schedule, we recommend that the
Secretary of Veterans Affairs develop a written implementation
strategy. This strategy could include steps to mitigate the possible
effects of rating schedule revisions on agency operations, including
an increase in the number of claims received.
VA Response: Concur. VA recognizes the need to ensure that changes to
the rating schedule are seamlessly integrated into business processes
and rating procedures. Currently, proposed rules regarding rating
schedule changes, the first step in the rating schedule update
process, have not yet been approved by VA, However, VA agrees that now
is the time to standardize a process for implementing rating schedule
changes. One step VA has already taken is including members of the
rating community on the workgroups that are developing the proposed
changes to the rating schedule. This helps ensure that changes do not
unnecessarily adversely impact the rating process and suggestions that
would improve the process are taken into account.
Going forward, VA will convene point persons from affected staffs to
develop a formal plan. The plan will establish cross-functional teams
representing all business processes and procedural functions involved
in rating schedule changes, including needs in areas of training
curriculum; procedure, field guidance, and VA manual updates; rating
automation; and other related areas. Targeted completion date is
August 31, 2013.
Recommendation 3: To ensure the rating schedule revisions are sustained
beyond the current update project, we recommend that the Secretary of
Veterans Affairs establish a formal policy, procedure, or mechanism to
revise the rating schedule — with updated medical and earnings loss
information — at regular intervals.
VA Response: Concur, VA is currently formulating a plan that evaluates
the rating schedule revision process to date. This includes the
acquisition and analysis of "lessons learned" data from the public
forums, working groups, drafting of proposed rules, a Veteran Service
Organization Summit, and the internal rulemaking concurrence process.
VA is also reviewing auditing tools to determine the efficiency and
effectiveness of operations associated with the revision process.
Evaluating the "lessons learned" data and auditing the current
revision process will allow Compensation Service to establish a
formal, continuous revision policy that is efficient, traceable, and
transparent to produce a rating schedule that reflects up-to-date
medical information. Targeted completion date is August 31, 2013.
[End of section]
Appendix V: GAO Contact and Staff Acknowledgments:
GAO Contact:
Daniel Bertoni, (202) 512-7215 or bertonid@gao.gov.
Staff Acknowledgments:
In addition to the contact named above, individuals making key
contributions to this report were Brett Fallavollita, Assistant
Director; Alison Grantham; Mark Ward; and James Whitcomb. In addition,
key support was provided by James Bennett, Tim Carr, David Chrisinger,
Alex Galuten, Kristen Jones, Jean McSween, Patricia Owens, and Almeta
Spencer.
[End of section]
Footnotes:
[1] For Comptroller General's authority, see 31 U.S.C. § 717(b)(1).
[2] 38 U.S.C. § 1155 provides that the "ratings shall be based, as far
as practical, upon the average impairments of earning capacity
resulting from such injuries in civil occupations."
[3] According to a VA-commissioned report, although significant
differences exist between state worker compensation programs and VA's
disability compensation program, both compensate for total disability
as well as the permanent consequences of injuries or diseases that are
not totally disabling. In contrast, SSA's disability programs
compensate individuals whose disabilities prevent them from engaging
in any substantial gainful activity and have lasted or are expected to
last at least 1 year or result in death.
[4] Congress sets the amount of veteran disability compensation for
each percentage disability rating, and this amount is subject to
annual cost-of-living adjustments.
[5] For a description of the procedures used to calculate combined
disability ratings, see GAO, Veterans' Disability Benefits: VA Should
Improve Its Management of Individual Unemployability Benefits by
Strengthening Criteria, Guidance, and Procedures, [hyperlink,
http://www.gao.gov/products/GAO-06-309] (Washington, D.C.: May 30,
2006).
[6] Generally, veterans with a disability rating of 20 percent or
higher (who have an employment handicap) and veterans with a
disability rating of 10 percent (who have a serious employment
handicap) are eligible to receive vocational rehabilitation services.
[7] For example, two studies, conducted by CNA and Economic Systems
Inc., respectively, suggested that veterans with mental health
impairments were being undercompensated.
[8] See GAO, High-Risk Series: An Update, [hyperlink,
http://www.gao.gov/products/GAO-11-278](Washington, D.C.: February
2011).
[9] The President's Commission on Veterans' Pensions (also known as
the Bradley Commission) was presidentially chartered in 1955 to carry
out a comprehensive study of the laws and policies pertaining to
veterans. The President's Commission on Care for America's Returning
Wounded Warriors (also known as the Dole-Shalala Commission) was also
presidentially charged to study the needs of the current generation of
"wounded warriors" in 2007.
[10] We also have reported on employment and training programs for
veterans with disabilities and made recommendations to improve program
coordination and measurement of performance. See GAO, Disabled
Veterans' Employment: Additional Planning, Monitoring, and Data
Collection Efforts Would Improve Assistance, [hyperlink,
http://www.gao.gov/products/GAO-07-1020] (Washington, D.C.: Sept. 12,
2007).
[11] All 191 World Health Organization member states in 2001 endorsed
the use of the ICF as the international standard to describe and
measure health and disability.
[12] Several modern frameworks of disability include the degree that
an individual is unable to participate in life activities. These
frameworks include the ICF, the Institute of Medicine model, and the
Abridged Verbrugge and Jette Model of Disability.
[13] The law states that VA shall adjust the rating schedule from time
to time based on experience. 38 U.S.C. § 1155. In addition, the
Advisory Committee on Disability Compensation was established by law
to provide advice to VA on the maintenance and periodic readjustment
of the rating schedule. 38 U.S.C. § 546.
[14] GAO, SSA and VA Disability Programs: Re-Examination of Disability
Criteria Needed to Help Ensure Program Integrity, [hyperlink,
http://www.gao.gov/products/GAO-02-597] (Washington, D.C.: Aug. 9,
2002). Although VA initiated a medical update of its rating schedule
in 1989, in 2002, we found that the updates generally took more than 5
years to complete for each body system. VA also did not complete
revisions for all body systems, including the musculoskeletal system.
This body system is the most common impairment category among all
veterans receiving disability compensation by the end of fiscal year
2011.
[15] Earnings loss studies include VA's Economic Validation of the
Rating Schedule (ECVARS) published in the late 1960s; CNA's Final
Report for the Veterans' Disability Benefits Commission: Compensation,
Survey Results, and Selected Topics published in 2007; and Economic
Systems Inc.'s A Study of Compensation Payments for Service-Connected
Disabilities, published in 2008.
[16] VA documents also state that a goal of the rating schedule
revisions is to improve the efficiency of the disability claims
process.
[17] This view is consistent with the ICF framework. As noted earlier,
the ICF focuses on ability to function despite a medical impairment,
including taking into account the impact of environmental factors,
such as products and technology, public attitudes, and support
services.
[18] In July 2012, VA officials told us that the agency is moving
forward with revisions to the mental health body system that
incorporate measures of functional impairment. For the other body
system revisions, VA is also considering changes that give greater
consideration to a veteran's ability to function.
[19] During recent updates to its medical criteria, SSA has also taken
steps to include an assessment of an individual's functional
abilities. For example, as part of SSA's comprehensive revisions to
the immune system criteria, the agency included several functional
measures, such as completing tasks in a timely manner despite
deficiencies in concentration or persistence. See GAO, Modernizing SSA
Disability Programs: Progress Made, but Key Efforts Warrant More
Management Focus, [hyperlink, http://www.gao.gov/products/GAO-12-420]
(Washington, D.C.: June 19, 2012).
[20] [hyperlink, http://www.gao.gov/products/GAO-02-597].
[21] Section two of this report provides further details on VA's
consideration of assistive technology and medical interventions.
[22] Medical interventions and assistive devices are currently
incorporated into the rating schedule for some medical diagnoses,
according to VA officials. For example, prosthetic implants are rated
within the anatomical locations and degree of residual effects of a
prosthesis.
[23] In 1997, we reported that there are generally accepted and widely
used approaches to statistically estimate the effect of specific
service-connected conditions on veterans' average earnings. See GAO,
VA Disability Compensation: Disability Ratings May Not Reflect
Veterans' Economic Losses, [hyperlink,
http://www.gao.gov/products/GAO/HEHS-97-9] (Washington, D.C.: Jan. 7,
1997). In addition, in more recent reports, the Institute of Medicine
and CNA recommended that VA routinely assess the impact of impairments
on earnings.
[24] VA will use data from the 2008 Economic Systems Inc. report
because the report's findings reflect the findings of other
independent studies related to the mental health diagnoses and do not
require further validation. In addition, the relatively noncomplex
nature of the hemic/lymphatic and endocrine body systems combined with
the minimal findings in the 2008 Economic Systems Inc. report require
no additional independent data, according to VA's project management
plan.
[25] See 26 U.S.C. § 6103. Early in the update project, VA sought wage
data on individual veterans from SSA and IRS. However, VA now plans to
use aggregate earnings data like prior earnings loss studies. For
example, to conduct their analyses in 2008, Economic Systems Inc.
reported that SSA released only aggregate earnings information on
groups of at least five veterans. The Veterans Disability Benefits
Commission also cited this challenge.
[26] Under federal law, adjustments to the rating schedule generally
cannot result in a reduction of a veteran's disability rating. 38
U.S.C. § 1155. Thus, if a recommended update would result in a
decrease in rating levels and senior VA officials approve the change,
veterans already in the system would not see a decrease in their
compensation. Increases, if warranted, are allowable.
[27] Two experts we interviewed said that measuring earnings loss one
body system at a time may not accurately capture the impact of
multiple impairments on veterans' earnings.
[28] VA's project management plan is designed to document the
organizational, developmental, and supporting processes that will
result in the successful revision of the rating schedule. VA also
developed an operating plan to consider the entire program lifecycle--
initiating, planning, executing, monitoring and controlling, and
closing.
[29] In addition, it is important that agencies establish policies,
procedures, and mechanisms that enforce management's directives and
clearly document activities, particularly with ongoing, long-term
projects. See GAO, Internal Control: Standards for Internal Control in
the Federal Government, [hyperlink,
http://www.gao.gov/products/GAO/AIMD-00-21.3.1] (Washington, D.C.:
November 1999).
[30] Several commission reports addressed the definition of quality of
life. Economic Systems Inc. defined quality of life for veterans as an
overall sense of well-being based on physical and psychological
health, social relationships, and economic factors. See Economic
Systems Inc., A Study of Compensation Payments for Service-Connected
Disabilities (Falls Church, VA: September 2008). The Institute of
Medicine defined quality of life as including the cultural,
psychological, physical, interpersonal, spiritual, financial,
political, temporal, and philosophical dimensions of a person's life.
See Institute of Medicine, A 21ST Century System for Evaluating
Veterans for Disability Benefits (Washington, D.C.: 2007).
[31] The Institute of Medicine noted that Congress and VA have added
conditions in the rating schedule that have little if any effect on
ability to work. However, the expansions of conditions have been ad
hoc and may not address the full range or extent of impacts of
injuries on quality of life. See Institute of Medicine, A 21ST Century
System for Evaluating Veterans for Disability Benefits (Washington,
D.C.: 2007).
[32] For example, in the rating schedule, a higher evaluation is
assigned for an amputation of an extremity that prevents the use of a
prosthetic device as compared to an evaluation of an extremity at the
same location, which allows for a prosthetic device. According to VA
officials, this higher evaluation could be argued as a quality of life
benefit.
[33] Enhanced compensation is provided to veterans with disabilities
who are housebound or who are in need of aid and attendance from
others.
[34] In 2004, the VA Vocational Rehabilitation and Employment Task
Force reached a similar conclusion, stating that VA had reduced its
focus on the ultimate mission of returning veterans with service-
connected disabilities to the workforce and stressed the preeminent
role of vocational rehabilitation in achieving that goal. See VA
Vocational Rehabilitation and Employment Task Force, Report to the
Secretary of Veterans Affairs: The Vocational Rehabilitation and
Employment Program for the 21st Century Veteran (Washington, D.C.:
March 2004).
[35] A 2008 study commissioned by VA noted that a useful distinction
is to separate the temporary disability period from the permanent
disability period. The temporary disability period begins when the
veteran is first affected by a service-connected disability and ends
on the date when the veteran reaches maximum medical improvement. See
Economic Systems Inc., A Study of Compensation Payments for Service-
Connected Disabilities (Falls Church, VA: September 2008).
[36] VA and others offer a range of employment and training programs.
For example, as previously discussed, VA's Vocational Rehabilitation
and Employment program provides rehabilitative services as well as
training toward degrees and certifications. VA, the Department of
Labor, and the Department of Defense also offer transitioning
servicemembers with short-term vocational assistance through the
Disabled Transition Assistance Program and Transition Assistance
Program (TAP). TAP, for example, provides 3-day employment workshops
at military installations to servicemembers up to 6 months before they
separate from the military (e.g., job searches, career decision
making, current occupational and labor market conditions, etc.). In
addition, veterans are given priority for Department of Labor-funded
federal workforce employment and training programs through a
streamlined delivery system, called the one-stop system, required by
federal law.
[37] The basic period of eligibility for Vocational Rehabilitation and
Employment program services is generally the 12 years after the date
of separation from active military service. The basic period of
eligibility may be extended in certain circumstances, such as if it is
determined that a veteran is in need of services to overcome a serious
employment handicap.
[38] Our previous work suggests some weaknesses in communication and
coordination among various VA disability programs. Overall, we have
noted that federal programs should be structured in a manner that
collectively allows them to provide coherent and seamless support to
people with disabilities. For example, see GAO, Federal Disability
Assistance: Wide Array of Programs Needs to be Examined in Light of
21ST Century Challenges, [hyperlink,
http://www.gao.gov/products/GAO-05-626] (Washington, D.C.: June 2,
2005).
[39] Economic Systems Inc., A Study of Compensation Payments for
Service-Connected Disabilities (Falls Church, VA: September 2008).
[40] GAO, High-Risk Series: An Update, [hyperlink,
http://www.gao.gov/products/GAO-11-278] (Washington, D.C.: February
2011).
[41] Several overarching components are necessary for the
reexamination strategies, including (1) sustained leadership to
champion program changes; (2) broad-based input from a range of
stakeholders; (3) empirically based research to assess alternative
approaches; and (4) clear and transparent processes for engaging the
broader public in the debate over recommended changes. See GAO, 21ST
Century Challenges: Reexamining the Base of the Federal Government,
[hyperlink, http://www.gao.gov/products/GAO-05-325SP] (Washington,
D.C.: February 2005).
[42] Ibid.
[43] Pub. L. No. 103-62, 107 Stat. 285.
[End of section]
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